In State Budget Talks, Governors Play Hardball

Some negotiations have become so heated that legislatures have taken their fight to the courts.

The Minnesota legislature was having a pretty productive session. That is, until the governor cut off its funding.

Both the House and Senate are controlled by Republicans in Minnesota; Gov. Mark Dayton is a Democrat. Nevertheless, they were able to reach agreement on some major legislation this year, especially on transportation and health care, as well as settling long-simmering issues regarding liquor sales and federal ID card requirements. By the time the legislature wrapped up its work on the budget in June, most people around the Capitol were feeling pretty good about the 2017 session.

But then Dayton rejected the part of the budget needed to keep the legislature in operation. Republicans had passed the largest tax cut the state had seen in two decades. Dayton didn’t like it, but he said he would let the bill become law without his signature. He changed his mind, however, when he learned of a provision in the bill that contained what he called a “poison pill” amendment that meant the Department of Revenue would have lost all its funding if the tax cut didn’t go through. He still signed it -- but with a catch.

The catch was that Dayton did some defunding of his own. He vetoed the legislature’s budget and invited lawmakers back for a special session to work out a new deal on taxes. “It seemed to come to a head right after there was an agreement on the budget,” says Andrew Karch, a University of Minnesota political scientist. “It allowed Republicans to claim he went back on his word.”

Dayton’s action may have seemed extreme, but similar things have been happening in other states this year. After the Montana Legislature approved a 15 percent increase in its own internal spending, Gov. Steve Bullock vetoed the entire legislative budget, telling the lawmakers to come back with a more reasonable number. In New Mexico, Gov. Susana Martinez wasn’t satisfied with vetoing the legislative branch budget. She vetoed the higher education budget as well, essentially closing down the agency that handles it. As with Dayton, Bullock and Martinez belong to a different party than the one that controls the legislature. Bullock is a Democrat; Martinez is a Republican.

Martinez was miffed that state Senate Democrats had refused to confirm a couple of her nominees to the state university’s board of regents. Legislators sued, claiming earlier court decisions had established that governors can’t eliminate an agency using the line-item veto. The New Mexico Supreme Court quickly rejected that argument and dismissed the suit in May, noting that Martinez had already called a special session to resolve the spending issue before the start of the new fiscal year. “The proper way to resolve budget disputes is for the executive and legislature to work together on a compromise that can both pass the legislature and be signed by the governor,” says Mike Lonergan, a spokesman for Martinez.

In Minnesota, Republican legislators had better luck in the courts, winning a ruling that Dayton had overstepped his bounds with his veto of the legislative budget. Even after they sued, however, the Republican leaders of the two legislative chambers went out of their way to praise Dayton in a joint newspaper column, citing all the bills they’d worked together on earlier in the year. They recognized that, however unhappy they might be with the governor, eventually they’d have to go back to working things out with him. “No one thinks this will be permanent, that we’re really not going to have a legislature,” says political scientist Thad Kousser. “This is just one way the governor can get huge leverage. It’s part of the theater of budget negotiations.”

*This story has been updated from the print version to reflect events that occurred after the magazine went to press.

A Ramsey County judge has ordered the state of Minnesota to continue funding the state House and Senate through Oct. 1, ensuring that the Legislature can keep operating amid its legal battle with Gov. Mark Dayton.
READ MORE

As the first leader of a national government to ever address the National Governors Association, Canadian Prime Minister Justin Trudeau called for fewer trade barriers and promised to work directly with state leaders.